Unexpected Late-Summer Pullback in Retail Market

With about 85% of our August retail sales data collected, we estimate that dealers sold an average of 5.5 trucks per rooftop. This result would be the lowest since January, a month heavily impacted by severe weather. At the same time, August’s result is only about 8% off the year-to-date average of 6.0 – something to note, but not cause for alarm. See graph below for detail.

The factors behind August’s slowdown are most likely more positive than January’s. We suspect the industry simply took a mild breather from acquiring new iron and concentrated on moving freight. This dynamic is historically typical (although the post-recession period has generally not adhered to this trend), but with sales volume strong through July, we assumed the summer of 2014 would remain strong. We now consider August to represent a mild pullback.

Looking ahead, September is typically a weaker month for sales volume, as is the 4th quarter. As such, we expect selling activity through December to be somewhat more subdued than in the first half of 2014.

As for pricing, it is likely that depreciation will accelerate mildly, and our estimate of roughly 1.5% per month should be observable by the end of the year. Stay tuned next week for final results.